UN investigates oil-for-food corruption

Edith M. Lederer
May 20, 2004
The independent panel investigating alleged corruption in the multibillion-dollar U.N. oil-for-food program in Iraq said Thursday it was pursuing claims of misconduct by U.N. staff and seeking access to Iraqi records.

Former U.S. Federal Reserve Chairman Paul Volcker, appointed last month by U.N. Secretary-General Kofi Annan to lead the inquiry, said he expected to compile his first interim report within three months. But he cautioned that a full investigation likely will require at least a year.

Volcker issued a statement ahead of a press conference at U.N. headquarters on the inquiry’s initial activities. These include a visit to Baghdad last week by a three-man team sent because of “the urgent need to establish contact at appropriate levels in the Iraqi government” and the U.S.-led coalition.

While Volcker said the inquiry’s priority was to investigate allegations of misconduct by U.N. staff, he said discussions about accessing Iraqi records “as needed” were under way with the board of the Supreme Audit Authority of Iraq, its accounting firm and the coalition.

“Those records are particularly important for identifying the conduct of outside contractors and the flow of funds,” Volcker said.

The committee statement was issued shortly after U.S. soldiers and Iraqi police raided the residence of Iraqi politician Ahmad Chalabi. Police seized computers, documents related to the oil-for-food program, a report by the Oil Ministry to the Governing Council and letters from the council, he said at a news conference.

U.S. and coalition officials have recently accused Chalabi of undermining their investigation into the oil-for-food program. The U.S.-backed investigation has collected more than 20,000 files from Saddam Hussein’s old regime and hired the American accounting firm Ernst & Young to review them.

Chalabi has launched his own investigation, saying an independent probe will have more credibility, and has appointed his own accounting firm. Chalabi took an early lead in exposing alleged abuses of the oil-for-food program.

The oil-for-food program, which began in December 1996 and ended in November, was launched to help Iraqis cope with U.N. sanctions.

The former Iraqi regime could sell unlimited quantities of oil provided the money went primarily to buy humanitarian goods and pay reparations to victims of the 1991 Gulf War. Saddam’s government decided on the goods it wanted, who should provide them and who could buy Iraqi oil – but the U.N. committee overseeing sanctions monitored the contracts.

During the seven-year program, Iraq exported $65 billion of oil and some $46 billion of that revenue went to the oil-for-food program.

Allegations of corruption in the program surfaced in January in the Iraqi newspaper Al-Mada, which published a list of about 270 former government officials, activists, journalists and U.N. officials from more than 46 countries suspected of profiting from Iraqi oil sales that were part of the U.N. program.

The General Accounting Office, the U.S. Congress’ investigative arm, estimated in March that Saddam’s government pocketed $5.7 billion by smuggling oil to its neighbors and another $4.4 billion by extracting kickbacks on otherwise legitimate contracts.

Annan launched an internal inquiry in February but canceled it in March to allow a broader, independent examination as allegations of massive corruption in the U.N. program grew, calling the world body’s credibility into question.

Annan has said any U.N. staff members failing to cooperate with the inquiry will be fired.

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